UPDATE 1-SKT Q1 profit below f'cast, marketing under control

* Q1 profit lower on forex-related losses, labour costs

* Marketing race has slowed but rivalry with KTF to grow

* Shares flat vs KOSPI's 2.7 pct gain

By Rhee So-eui

SEOUL, April 30 (Reuters) - SK Telecom, South Korea's top mobile carrier, posted a weaker-than-expected quarterly profit due to foreign exchange-related losses and higher labour costs, and faces a pitched battle against a beefed-up rival.

A margin-sapping race to attract new users through subsidies has eased since the second half of 2008 as mobile operators switched their focus to retaining users through bundled offers and long-term contracts.

But SK Telecom (017670.KS) faces a potentially fierce battle with No.2 carrier KTF (032390.KS), which is set to be absorbed by its parent and fixed-line leader KT Corp (030200.KS) and is expected to cut costs and improve its product lineup.

SK, which controls about half the country's mobile market, posted a 317 billion won ($235.7 million) net profit in the first quarter, missing an average forecast of a 396 billion won profit from Reuters Estimates.

The result fell 17 percent from a 383 billion won net profit in the year-earlier quarter, although improved from 263 billion won in October-December.

The results also show that marketing spending have come under control. Marketing costs fell 14 percent from a year earlier to 661 billion won, declining for the third consecutive quarter.

Quarterly sales came at 2.88 trillion won, in line with the average forecast.

SK's user base reached 23.35 million at the end of March, up 4 percent from a year earlier. But its average revenue per user fell 3 percent from the first quarter of 2008.

Rival KTF reported last week that its first-quarter net profit rose more than sixfold from a year earlier thanks to lower marketing costs. The smallest LG Telecom (032640.KS) reported a 52 percent rise in January-March net profit.

SK Telecom shares were trading flat as of 0229 GMT, underperforming the wider market's 2.7 percent rise. The stock declined 10.5 percent in the year through Wednesday, against the KOSPI's 19 percent gain. (Editing by Nick Macfie)